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From general equilibrium theory to the economics of uncertainty: a personal perspective

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  • Yasuhiro Sakai

    (Shiga University)

Abstract

This note is concerned with the question of why and how my research interest has been changed from general equilibrium theory to the economics of uncertainty. Although it is fundamentally a personal perspective, it is expected to have historical implications as well, thus serving as a good guide toward the new horizon of integrated social science. When I started my research life, so many people were involved in the “Cold War” between the capitalist bloc and the socialist bloc. In 1968, to escape from the Japanese university disturbance, I applied for the graduate program at the University of Rochester, with Professor Lionel W. McKenzie being a towering figure. Later, when I took care of the math econ sequence at the University of Pittsburgh, I began to have a feeling of doubt about the practical applicability of general equilibrium theory a la McKenzie. Partly being motivated by a suggestion from Professor Oscar Morgenstern, who came to Pittsburgh for an academic lecture, I started to shift my research area from pure and abstract theories to more practical and applied subjects including the economics of uncertainty. In 1989, all of a sudden, the seemingly invincible Berlin Wall turned down, being followed by the collapse of the mighty Soviet Union. In the dreadful year of 2008, the world economies were involved in the most serious crisis since the Great Depression on the 1930s. At present, we are living in the “New Age of Uncertainty,” hoping for the coming of the second Keynes and/or the second Knight. Thomas Piketty’s new book on economic inequality would possibly lead to the promotion of an integrated social science in the new century.

Suggested Citation

  • Yasuhiro Sakai, 2020. "From general equilibrium theory to the economics of uncertainty: a personal perspective," Evolutionary and Institutional Economics Review, Springer, vol. 17(1), pages 133-143, January.
  • Handle: RePEc:spr:eaiere:v:17:y:2020:i:1:d:10.1007_s40844-019-00156-y
    DOI: 10.1007/s40844-019-00156-y
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    References listed on IDEAS

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    1. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    2. Yasuhiro Sakai, 2016. "J. M. Keynes on probability versus F. H. Knight on uncertainty: reflections on the miracle year of 1921," Evolutionary and Institutional Economics Review, Springer, vol. 13(1), pages 1-21, June.
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    More about this item

    Keywords

    General equilibrium theory; Economics of uncertainty; Cold War; L.W. McKenzie; O. Morgenstern; New age of uncertainty;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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